Rex, WakeMed Make Peace

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This article is co-published with North Carolina Health News.

In a resolution to the bitter dispute between Wake County’s two largest health care providers, leaders from both WakeMed Hospital and the UNC Health Care system announced Tuesday an agreement ending their public squabbling.

The agreement extracts many of the things WakeMed wanted from UNC subsidiary Rex Hospital: more transparency about Raleigh-based Rex’s finances and a commitment by Rex to providing more indigent care. The agreement also obligates UNC to provide mental health services in Wake County, and creates changes in the governance of UNC Health Care.

It was hard to see what, if anything, WakeMed sacrificed in the deal, other than an opportunity to dominate the Raleigh market.

“We’re very happy with the agreement,” said WakeMed spokeswoman Heather Monackey.

State-owned assets
The agreement ends a dispute that began more than a year and a half ago when WakeMed Hospital made an unsolicited offer to purchase Rex Hospital from UNC for about $750 million.

The offer came after a group of cardiologists defected to Rex Hospital from WakeMed in late 2009. The Wake Heart and Vascular group left WakeMed, even after hospital leaders built new facilities to accommodate patients from the physician group.

WakeMed leaders accused officials at UNC of being “predatory” in how they competed in the Raleigh market. Officials from WakeMed also complained that Rex did not do “its fair share” of providing care for the uninsured of Wake County.

In May 2011, leaders at WakeMed made an offer to purchase the state-owned Rex Hospital, saying it could help put close to a billion dollars into state coffers. WakeMed also criticized Rex’s lack of transparency, with WakeMed leaders asking publicly why Rex did not file IRS paperwork usually required by not-for-profit hospitals.

UNC leaders retorted that as a system, UNC Healthcare gives away plenty in free care, and that Rex was integral to the hospital system’s solvency. They said that as a system, UNC’s finances were reported to the state, Rex’s finances included.

Both organizations bought television, radio and newspaper ads in a high-profile effort to defend their points of view, and started blogs where the rhetoric, at times, got ugly.

WakeMed’s offer to buy Rex was well-timed, coming during the midst of a state fiscal crisis.

The political timing was also good for WakeMed; former state Republican party chair Tom Fetzer completed a term on WakeMed’s board in 2009, just before leading Republicans to reclaim the General Assembly for the first time in decades. Fetzer became part of WakeMed’s lobbying team in early 2011, at a time when many people in the legislature owed him their jobs.

Legislators formally got involved in late 2011, when the House of Representatives created the Committee on State Owned Assets, to examine the status of Rex Hospital, among other issues. Committee members suggested changing the governance of UNC Health Care to make it more accountable to the legislature.

All smiles
The room was all smiles and handshakes on Tuesday, however, when leaders from WakeMed, UNC and Wake County gathered for a press conference on the agreement reached between the two organizations.

The agreement obligates UNC Health Care to:

  • provide a new 28-bed inpatient psychiatric facility at the cost of about $30 million

  • spend $10 million in five years on crisis mental health services

  • require UNC to file an IRS Form 990 tax form for Rex Healthcare, Chatham Hospital and Triangle Physician Network

  • continue to work with WakeMed to train medical residents at WakeMed Hospital

  • change the structure of UNC Health Care’s board of directors to put it more squarely under the control of the UNC Board of Governors

WakeMed will formally withdraw its offer to buy Rex.

WakeMed head Bill Atkinson (left) and UNC Health Care head Bill Roper (right) talk to reporters at the legislative building after announcing an agreement that will have UNC spending about $40 million to provide more mental health care in Wake County.

According to a document handed out to reporters, both WakeMed and Rex have “agreed to resolve current disputes.” The agreement obligates both hospitals and their leaders to refrain from publicly criticizing each other in the form of blogs, bulletins, T-shirts, posters, speeches or in anything else that’s published.

“What we got was a chance to stand by our friends again,” said WakeMed head Bill Atkinson, who said he was satisfied with the agreement. “I think we all compromised on certain things we can work through later … I would say for the most part, 99 percent of what we wanted to talk about has been addressed.”

“My strong preference is to say let’s leave the past behind us and let’s look forward to working together in the future,” said UNC Health System CEO Bill Roper when asked about the agreement.

“I’m not sure the public discussion would be much enhanced by a detailed accounting of what the last month or so has been like,” he continued.

When Roper was asked about what, if any, concessions WakeMed had made in the agreement, compared to the ones made by UNC, Roper responded, “Just keep smiling… we’re happy.”

Wake County wins
Former National Alliance on Mental Illness-Wake County head Ann Akland and her husband, Jerry, the current head of the organization, were in the room for the announcement. Ann Akland’s smile was wide and unforced.

“Oh, it’s just the brightest day for behavioral health care in Wake County in the past 10 years,” she chirped.

“To have these hospitals finally decide to have these beds will allow people to stay here and not have to go all over the state for care,” Akland said. “It’s a real step in the right direction.”

UNC’s Roper said details still need to be worked out for the new mental health beds, the agreement says the 28-bed unit will be part of Rex Healthcare, but not necessarily on the Rex campus.

Wake County Manager David Cooke said the county has been talking to UNC for years about getting help with mental health services in Wake County, since the decision was made to close Dorothea Dix Hospital.

“We put out a proposal at that time,” he said. “We also approached UNC to see if they would run WakeBrook,” Cooke said, referring to the county’s new mental health facility off of Sunnyvale Road.

Cooke said county officials will probably have a hand in deciding the location for the unit.

The new mental health capacity can’t come soon enough, according to Wake Human Services head Ramon Rojano. He said the WakeBrook facility has had to close to new admits three times in the past two months because it was filled to overflowing.

“What this will do is take away the agony for people who have to wait for days in the emergency department for a bed,” Rojano said.

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